PJC Business

PJC 101.49

C ONTRACTS

PJC 101.49 Construction Contracts—Misapplication of Trust Funds—Affirmative Defenses—Instructions Misapplication of trust funds by Don Davis is excused if— 1. the trust funds were used by Don Davis to pay Don Davis ’s actual expenses directly related to the construction or repair of the improvement; [ or ] 2. the trust funds have been retained by Don Davis , after notice to the beneficiary who has made a request for payment, as a result of Don Davis ’s reasonable belief that the beneficiary is not entitled to such funds; [ or ] 3. Don Davis paid the beneficiaries all trust funds that they are enti tled to receive no later than thirty days following written notice to Don Davis of the filing of a criminal complaint or other notice of a pending criminal investigation. COMMENT When to use. PJC 101.49 is to be used in conjunction with PJC 101.48 if the defendant raises a statutory defense prescribed in Texas Property Code section 162.031(b)–(c). Source of instruction. The affirmative-defense instruction is derived from Tex. Prop. Code § 162.031(b)–(c) as well as Dealers Electrical Supply Co. v. Scoggins Construction Co. , 292 S.W.3d 650, 657 (Tex. 2009) (“A party who misapplies trust funds under the [Texas Construction] Trust Fund[s] Act is subject to civil liability to trust-fund beneficiaries whom the Act was designed to protect.”). Use of “or.” Each of elements 1, 2, and 3 should be used only when raised by the evidence. If more than one of the alternative instructions listed above is used, each must be separated by the word or , because a finding of any one of the acts or practices defined in the instructions would constitute an affirmative defense under the Texas Construction Trust Funds Act. Because each of these acts or practices constitutes an affirmative defense under the Act, the instructions should be adapted to include the kind of conduct involved in a given case. Trust funds retained as authorized or required by law. Texas Property Code section 162.031(b) provides an affirmative defense if the trust funds have been retained as authorized or required by chapter 53 of the Code. This affirmative defense is a question of law for the court.

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